THIRD DIVISION
[G.R. No. 229465. March 22, 2017.]
BDO UNIBANK, INC. [FORMERLY BANCO DE ORO UNIBANK, INC.], petitioner,vs. CONCEPCION CRUZ, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedMarch 22, 2017, which reads as follows:
"G.R. No. 229465 (BDO Unibank, Inc. [formerly Banco de Oro Unibank, Inc.] vs. Concepcion Cruz). — This petition for review under Rule 45 of the Rules of Court seeks to reverse and set aside the Decision 1 dated October 28, 2016 and Resolution 2 dated January 16, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 103262 entitled "Concepcion Cruz v. Banco de Oro Unibank, Inc.," which affirmed the Decision dated September 19, 2013 of the Makati City Regional Trial Court (RTC), Branch 62, in Civil Case No. 09-392.
Factual Antecedents
The facts, as culled from the records, are as follows:
In 2003, respondent Concepcion Cruz (Cruz), thru her nephew, Jose Villagracia (Villagracia), opened a Peso savings account in petitioner BDO Unibank, Inc.'s (BDO) Quintin Paredes Branch (QP Branch). Due to Cruz's advanced age, Villagracia was the one who submitted Cruz's Customer Account Record and Specimen Signature Cards to the bank. Villagracia was then occupying the position of Assistant Vice President and Team Head of the Commercial Banking Group, Luzon Regional Banking Unit of BDO. 3
Thereafter, in March 2004, Cruz, accompanied by Villagracia, opened a dollar-denominated common trust fund with the QP Branch under the Smart Money Dollar Fund-Gold (Smart Money Fund) in the amount of US$26,866.50 covered by Certificate of Participation (COP) No. $G-010004. Cruz, thru Villagracia, surrendered COP No. $G-010004 to encash and reinvest the proceeds thereof. She was then issued COP No. $G-035806 dated March 16, 2004 covering the new placement in the amount of US$28,097.19. 4
The Smart Money Fund, which was a Trust Agreement issued by BDO to Cruz, provided, among others, that in order to withdraw participation from the fund, the Trustor (the bank's client) shall sign on the Notice of Withdrawal and surrender the original COP at the branch were the account is held during trading hours. The value of the withdrawing participation of the Trustor shall be paid out based on the Net Asset Value of the Fund on the date of withdrawal, as determined by BDO, upon endorsement and surrender of the original COP. In case of partial withdrawals, a new COP shall be issued for the amount to be invested. 5 CAIHTE
In September 2006, BDO phased out the Smart Money Fund in line with the directive of the Bangko Sentral ng Pilipinas. Thus, BDO converted Cruz's Smart Money Fund account into a Dollar Money Market Fund ($MMF) account, for which she was issued COP No. 26604, which will only be given to her possession upon surrendering COP No. $G-035806. 6
On December 18, 2006, Villagracia, on behalf of Cruz, went to the QP Branch to inform it that COP No. $G-035806 was misplaced and could no longer be found. He made a commitment to BDO that Cruz would submit an Affidavit of Loss for the lost certificate. He also encashed a portion of $MMF COP No. 26604 amounting to US$1,500.00 and reinvested the remaining balance of US$30,594.47. Accordingly, Cruz, through Villagracia, was issued $MMF COP No. 0031477. 7
On January 17, 2007, Cruz, thru Villagracia, submitted to BDO a notarized Affidavit of Loss of the original COP No. $G-035806. 8
From March 2007 until October 2007, Cruz, thru Villagracia, made several transactions arising from her original placement, wherein she encashed and reinvested the amounts thereof in a Dollar time deposit and Peso money market fund. The last transaction was made on October 10, 2007, when Villagracia surrendered and signed the Dollar Time Deposit No. 2569406, the entire proceeds of which in the amount of US$18,978.35 was withdrawn by Villagracia and deposited to the account of Key West Trading — an authorized dealer of foreign exchange — in the total amount of PhP775,164.82. 9
Sometime in 2009, Cruz informed the BDO QP Branch of her intention to withdraw her money covered by COP No. $G-035806. However, she was told that the money had already been withdrawn by Villagracia. It was then that Cruz discovered that Villagracia made several unauthorized transactions with the QP Branch under her name, including the withdrawal of the money covered by COP No. $G-305806. It appears that Villagracia was able to withdraw the proceeds of the account upon submission of duly accomplished forms and withdrawal slips bearing the signature of Cruz. 10
As a result, Cruz filed a Complaint for Sum of Money and Damages against BDO with the RTC to recover the amount of her trust placement, plus damages, and attorney's fees.
BDO, for its part, contended that Cruz's representations that Villagracia was duly authorized to represent her in her transactions with the bank created an agency by estoppel between them that she cannot be permitted to deny. Thus, BDO asserted there was a valid payment to Cruz through Villagracia.
Ruling of the RTC
On September 19, 2013, the trial court rendered a Decision in favor of Cruz, disposing the case as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff CONCEPCION CRUZ directing the defendant BANCO DE ORO UNIBANK to pay plaintiff the sum of:
1) twenty eight thousand ninety seven & 19/100 ($28,097.19) US Dollars representing the trustee's fund under Smart Money Dollar Fund-Gold (SMART Money) with BDO plus interest at the legal rate of twelve percent (12%) per annum from date of judicial demand on May 6, 2009 until fully paid;
2) one hundred thousand (P100,000.00) Philippine currency as moral damages;
3) one hundred thousand (P100,000.00) Philippine currency as exemplary damages; and
4) fifty thousand (P50,000.00) Philippine currency as and for attorneys' fees.
SO ORDERED.
According to the trial court, BDO failed to exercise extraordinary diligence when it failed to verify whether all transactions in relation to its client's account were authorized. 11 BDO allowed the release of the amount to Villagracia without requiring Cruz to sign the Notice of Withdrawal and to surrender the original COP No. $G-035806. It was only on January 17, 2007, or 29 days after the amount covered by COP No. $G-035806 was released by BDO, when the Affidavit of Loss purportedly executed by Cruz was submitted. Clearly, BDO's reliance on the undocumented authority of Villagracia, considering that he was its officer, is plain gross negligence. 12 Thus, the transactions that led to the withdrawal of amount covered by Cruz's COP No. $G-035806 were unauthorized and in violation of the terms of Trust Agreement of Smart Money. 13
BDO appealed the RTC's Decision to the CA.
Ruling of the Court of Appeals
The CA, in the adverted Decision, denied the appeal and affirmed the ruling of the RTC.
In ruling thus, the CA affirmed the RTC's finding that BDO failed to exercise the highest degree of diligence required of banking institutions, considering that: 14first, BDO failed to verify Villagracia's authority to transact on behalf of Cruz. Nothing in the records indicated that Villagracia was clothed with special authority to represent or to act for and on behalf of Cruz; thus, BDO cannot fully rely on Villagracia's submission of bank documents purportedly signed by Cruz, more particularly for the purpose of withdrawing her funds covered by COP No. $G-035806, moreso when it was shown that such documents were "already accomplished and signed" even on the "Redemption and Payment Acknowledged by" and "Payment Received by" portions when it was submitted by Villagracia to BDO; 15 and second, BDO disregarded its own banking rules and regulations, which formed part of the Trust Agreement 16 of the Smart Money Fund.
The CA, however, modified the judgment as regards the rate of interest imposed on the monetary awards, which shall be reckoned from the date of extra-judicial demand, and likewise reduced the amount exemplary damages awarded from PhP100,000.00 to PhP50,000.00, in order to conform to prevailing jurisprudence. 17 The dispositive portion of the Decision reads:
WHEREFORE, the Appeal is DENIED. The September 19, 2013 Decision of the Regional Trial Court, Branch 62, Makati City in Civil Case No. 09-392 is hereby AFFIRMED with MODIFICATIONS that defendant-appellant shall pay plaintiff-appellee:
1. Twenty-Eight Thousand Ninety Seven Dollars and Nineteen Cents (US$28,097.19) representing the amount covered by COP No. $G-035806 which shall earn twelve percent (12%) interest per annum reckoned from the date of extrajudicial demand on March 24, 2009 until June 30, 2013; and, six percent (6%) interest per annum from July 1, 2013 until fully paid; and,
2. Exemplary damages is REDUCED from One Hundred Thousand Pesos (Php100,000.00) to Fifty Thousand Pesos (Php50,000.00), moral damages amounting to One Hundred Thousand Pesos (Php100,000.00) and attorney's fees amounting to Fifty Thousand Pesos (Php50,000.00).
SO ORDERED.
BDO's motion for the reconsideration of the adverted Decision was denied by the CA in its Resolution dated October 25, 2016. Hence, this petition.
BDO, in the main, argues that although Cruz did not execute a special power of attorney in favor of Villagracia, she clothed him with apparent authority to transact on her behalf insofar as the BDO is concerned. BDO advances that Cruz never submitted her account opening forms with the bank which she caused to be submitted on her behalf by Villagracia, and that the only documents questioned by Cruz were the Smart Money Dollar Fund Gold No. SG035806 and the photocopy of her Affidavit of Loss. Thus, BDO posits that it could not be faulted for relying on Villagracia's authority to transact with the bank on behalf of Cruz. 18 DETACa
Issue
The sole issue for the resolution of this Court is whether or not BDO was negligent in dealing with the transactions of Cruz's placements.
The Court's Ruling
At the outset, we note that the determination of negligence, defined as the omission of that diligence required by the nature of the obligation and corresponds to the circumstances of the persons, of the time and of the place, 19 is a factual matter 20 that requires evidentiary scrutiny. This being the case, the instant petition must fail because a question of fact cannot properly be raised in a petition for review on certiorari.
In any event, the petition is denied for lack of merit.
This Court has, time and again, emphasized that since their business and industry are imbued with public interest, banks are required to exercise extraordinary diligence, which is more than that of a Roman paterfamilias or a good father of a family, in handling their transactions. 21 Accordingly, banks are expected to ensure that the depositor's funds shall only be given to him or his authorized representative. 22 Thus, as standard banking practice intended precisely to prevent unauthorized and fraudulent withdrawals, banks should verify with the client-depositor to authenticate and confirm that he or she has validly authorized such withdrawal. 23
Due to this high and exacting standard of diligence, BDO cannot repeatedly harp on the argument that Cruz clothed Villagracia with apparent authority due to her to extricate itself from its liability for the lost amount, more so since it was proved that the transactions with Villagracia were attended by carelessness and gross disregard of banking procedures. As observed by the RTC, BDO miserably failed to comply with this necessity:
The Court finds credence to [Cruz]'s claim that she did not authorize the withdrawal of her SMDF Gold COP No. 035806 placement on the obvious fact that she has still in possession of the original thereof which [BDO] failed to refute. Besides, the candid and truthful narration of [BDO]'s own witness, Ms. Ching, gave the Court a clear glimpse of the transactions that befell on [Cruz]'s account with BDO. She testified that it was Villagracia who committed to [BDO] that [Cruz] will submit to the branch an affidavit of loss. It is Villagracia's representation that prompted [BDO] to immediately release to the said person $MMF and the same was able to withdraw and bankrolled (sic), even without the affidavit of loss and any special power of attorney authorizing Villagracia to act for and in behalf of [Cruz]. 24
From the foregoing observation, it can be gleaned that BDO released the fund to Villagracia based only on his assurances and without the bank having verified his authority to withdraw the same. This omission lends credence to the findings of the lower courts that the bank had been gravely remiss in its duties.
Assuming arguendo that Cruz, indeed, gave the impression that Villagracia indeed possessed an apparent authority to transact with the bank on her behalf, this does not exculpate BDO from its own palpable negligence in faithfully complying with standard banking procedure. As determined by the CA, BDO disregarded its own banking policy and procedure when it released the amount covered by COP No. $G-035806 to Villagracia without requiring Cruz to sign the Notice of Withdrawal and to surrender the original COP No. $G-035806. As also found by the RTC, thus:
[BDO's] witness Ching's admission that at no time did plaintiff go to BDO QP branch to transact on her accounts readily negates and defeats defendant's too much belabouring on whether it was plaintiff herself who executed the affidavit of loss. The fact that the Affidavit of Loss allegedly executed by [Cruz] was submitted only on January 17, 2007, or twenty nine (29) days after [BDO] had already issued and turned over to a purported representative of [Cruz] is an unmistakable indication that irregularity had attended the transaction and that banking rules or procedures had been breached, and worse, the terms of the Trust Agreement (Smart Money) was violated no less by [BDO]'s employees, including [Cruz]'s nephew, who happened to be BDO Senior Officer, as Assistant Vice-President and team head of the Commercial banking Group, Luzon Regional Banking Unit. 25
The banking business is highly sensitive with a fiduciary duty towards its client and the public in general, such that central measures must be strictly observed. 26 Thus, a bank's disregard of its own banking policy amounts to gross negligence, which is described as "negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and unintentionally with a conscious indifference to consequences insofar as other persons may be affected." 27
In light of these circumstances, there is no cogent reason to deviate from the CA's ruling finding BDO liable for the amount of US$28,097.19 under COP No. $G-035896.
WHEREFORE, finding no reversible error in the assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 103262, the Court resolves to DENY the petition and, thus, AFFIRM said Decision and Resolution.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
By:
MISAEL DOMINGO C. BATTUNG IIIDeputy Division Clerk of Court
Footnotes
1. Penned by Associate Justice Carmelita Salandanan Manahan, with the concurrence of Associate Justices Japar B. Dimaampao and Franchito N. Diamante; rollo, pp. 24-52.
2.Id. at 54-56.
3.Id. at 27.
4.Id. at 25, 27-28; 107.
5.Id. at 107.
6.Id. at 28.
7.Id.
8.Id. at 29.
9.Id. at 28-32; 109.
10.Id. at 26, 32-33.
11.Id. at 34.
12.Id. at 154-156.
13.Id. at 155-156.
14.Id. at 40.
15.Id. at 40-41.
16.Id. at 42. The pertinent portions of the Trust Agreement, as quoted in the CA Decision, provide:
This Agreement, entered into by and between herein Participant as Trustor and Banco de Oro Universal Bank (BDO), in its capacity as Trustee, hereby agree as follows:
xxx xxx xxx
6. To withdraw participation from the Fund, the Trustor shall sign on the Notice of Withdrawal and surrender the original COP at the branch where his account is held during trading hours. In case of withdrawals by joint or multiple investors, the Trustor declares under the penalties of perjury that his co-investor/s is/are still living. Depending on Trustor's amount of withdrawal and preferred mode of payment, BDO reserves the right to require at least five (5) banking days prior notice before intended withdrawal date.
The value of the withdrawing participation of the Trust therein shall be paid based on the Net Asset Value of the Fund on the date of withdrawal, as determined by BDO, upon endorsement and surrender of the original COP. In case of partial withdrawals, a new COP will be issued for the amount to be reinvested.
17.Nacar v. Gallery Frames and/or Bordey, Jr., G.R. No. 189871, August 13, 2013 and Oliver v. Philippine Savings Bank, G.R. No. 214567, April 4, 2016.
18.Rollo, p. 12.
19.BPI v. Sanchez, G.R. No. 179518, November 19, 2014, citing Cang v. Cullen, G.R. No. 163078, November 25, 2009, 605 SCRA 391, 404.
20.Arguelles v. Malarayat Rural Bank, Inc., G.R. No. 200468, March 19, 2014, citing PNB v. Heirs of Estanislao and Deogracias Militar, 526 Phil. 788, 799-800 (2006).
21.Philippine National Bank v. Raymundo, G.R. No. 208672, December 7, 2016, citing Philippine National Bank v. Sps. Cheah, 686 Phil. 760, 771 (2012).
22.Oliver v. Philippine National Bank, G.R. No. 214567, April 4, 2016.
23.Philippine National Bank v. Tria, 686 Phil. 1139, 1157 (2012).
24.Rollo, pp. 111-112.
25.Id. at 111.
26.Security Bank Savings Corporation v. Singson, G.R. No. 214230, February 10, 2016.
27.Philippine National Bank v. Raymundo, G.R. No. 208672, December 7, 2016.